Northern Rock Restructuring Set For 1st January 2010

Northern Rock Restructuring Set For 1st January 2010

The Treasury has confirmed Northern Rock restructuring will take place on 1
January 2010. 

The proposed restructuring of Northern Rock received European Commission
approval on 28 October 2009 and the Northern Rock plc Transfer Order 2009 has
now been laid before Parliament.

The restructuring will strengthen Northern Rock’s capital position and enable
the bank to return to the mortgage market.  Under the restructuring, Northern
Rock’s business will be split between two companies – Northern Rock plc and
Northern Rock (Asset Management) plc – with the back book of mortgages managed
separately from Northern Rock’s other business.

This approach reflects the Government’s objective of creating a well
functioning mortgage market with responsible lending and access to a wide range
of affordable mortgages.

As a result of the restructuring, Government guarantees in relation to
Northern Rock have been restated to apply to both entities.

Financial Services Secretary Paul Myners said:

“On 1 January Northern Rock will take a further step towards an independent
future.  The Government took action to stabilise the bank two years ago,
ensuring in the process that not a single customer of the bank lost any of their

“Now we can prepare the bank for its restructuring and ensure that it plays
its full role in supporting the recovery of the economy.”

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